Virgin inks new deal with Tourism Australia

Matt O'Sullivan and Glenda Kwek

Virgin Australia has stepped in to fill a void in funding for Tourism Australia's marketing campaigns, sealing a new deal with the peak tourism body after rival airline Qantas' shock decision to cut off financial ties.

Virgin and Tourism Australia announced today that they were increasing their current partnership to $12 million over three years, with a focus on key inbound visitor markets to Australia - the US, UK, mainland Europe, Asia and New Zealand.

The two organisations had signed an $6 million agreement in May.

Tourism Australia Managing Director Andrew McEvoy described the increased partnership as "both logical and compelling". Virgin's chief executive John Borghetti said the two organisations "recognise the importance of tourism to Australia's economy and are committed to promoting Australia as a world class destination".

The Flying Kangaroo severed its 40-year-partnership with the official tourism agency in late November after saying its chairman, Geoff Dixon, who ran Qantas from 2001 to 2008, was in a position of "untenable potential conflict".

The decision left Tourism Australia without its largest private contributor. Qantas had provided $44 million in funding over three years for promotional campaigns.

Advertisement

Mr Dixon had been described as being part of a group of investors - which include Qantas executive Peter Gregg, Sydney money man Mark Carnegie and adman John Singleton - who were seeking support from large shareholders and unions for a change in strategic direction at the national carrier.

Qantas had wanted Mr Dixon to step down as chairman or disassociate himself from the rebel group.

Earlier, Virgin threatened to speed up its growth in other parts of Australia except Brisbane, after expressing frustration that a decision to open up routes to regional airports in Queensland was being delayed until 2014.

The airline had wanted to tender for several regulated and subsidised routes in regional Queensland, such as Roma and Bundaberg, when QantasLink's contracts expired next year, but said they were informed the Department of Transport was rolling over the agreements until 2014.

But the airline said it had no intention of pulling its 1200 staff out of Brisbane.

"Competition brought about by deregulating markets will bring not doubt bring lower fares and deliver better access to regional communities, reduce costs to business and boost tourism," Virgin's head of corporate affairs, Danielle Keighery, told Fairfax Media this morning.

"If regulation is to continue on certain routes, they need to be put out to tender in a transparent process."

Queensland Deputy Premier Jeff Seeney said he was concerned about the length of time the Department of Transport was taking to consider the issue.

"Some of these routes like the one from Cairns to Weipa, the one from Brisbane to Roma - the numbers have grown to such an extent where Virgin is saying, we want an opportunity to compete in that market," he told 612 ABC Brisbane today.

"And I think that's a legitimate claim and something we should be talking to Virgin about.

"Anything that we can do to improve the commercial flights to Queensland, we certainly as a government are keen to do. And I think the department of transport is looking at that whole issue," Mr Seeney said.

"But what concerns me is that they've said that they need until the end of 2014 to make those decisions. I have a bit of difficulty with that time frame. … I think we should be able to do something shorter than a time frame of 2014."

Virgin's chief executive John Borghetti would be meeting the Queensland Premier Campbell Newman in the coming days or weeks to discuss this matter.

The Brisbane to Roma route served about 150,000 passengers last year, with return fares of about $730.